Trade Negotiations

Article excerpt

BYLINE: Jerry Vilakazi

The European Union is currently negotiating an Economic Partnership Agreement (EPA) with some members of the Southern African Development Community - Angola, Botswana, Lesotho, Mozambique, Namibia, South Africa, Swaziland and Tanzania.

This new free trade agreement is intended to replace the trade provisions of the Cotonou Partnership Agreement which were found not to be in compliance with World Trade Organisation (WTO) rules.

It is now coming down to the wire for these negotiations as there is a requirement that an agreement be in place by the end of the year. Accusations are already starting to fly as to who should be blamed for the failure to agree on an EPA. The EU and some SADC countries are pointing the finger at South Africa, but the issues are more intricate.

South Africa already has the Trade Development and Co-operation Agreement (TDCA) with the EU, which governs trade between the two.

Some would ask why we need an EPA. An EPA provides an opportunity to make progress on what was achieved in the trade and co-operation agreement, but, more importantly, it is a chance for the Southern African Customs Union (Sacu) to have one regime under which all members trade with the EU.

An effective agreement would harmonise the relationship of South Africa and the BLNS (Botswana, Lesotho, Namibia and Swaziland) with the EU. There is also a chance to address the sensitivities of the BLNS, which were not included in the TDCA.

It is important the agreement offers real benefits to the private sector in the region. This can only be achieved if consideration of the scope of the EPA goes beyond simply market access for goods.

In today's global trade environment, tariffs are often the least of the worries of business, with non-tariff barriers emerging as significant hurdles to trade between countries. Thus it appears issues such as trade facilitation, customs, standards, sanitary and phytosanitary (SPS) measures and rules of origin can have a significant impact on the ability of exporters to gain access to the market of another country.

Given the tight time-frame for completion of the EPA negotiations, the best option would seem to be a broad-based framework agreement to be implemented by January 1. This would provide certainty of market access to the EU for other countries in the region (notably Botswana, Namibia and Swaziland) and would also give additional time for discussions on other more complex issues.

The hasty signing of an all-inclusive SADC EPA could result in an agreement that does not necessarily advance the interests of the region, and has the potential to further complicate the process of regional integration in SADC, especially the proposed formation of a customs union by 2010.

Some ask what the hurry is to conclude the EPA. The short answer is that there is a requirement under the provisions of the WTO for the trading relationship between the EU and African, Caribbean and Pacific (ACP) countries to be brought into line with the principles of reciprocity and most-favoured-nation treatment. The WTO granted a waiver for the Cotonou Partnership Agreement, but only until January 1, 2008.

Another option raised by some commentators is to seek an extension of this WTO waiver. This, however, is likely to be a difficult process that may be opposed by a number of other developing country members of the WTO. It may also not be in the best interests of SADC countries as it could lead to the further erosion of preferential market access and a lack of certainty in the long run.

To date, the SADC EPA negotiations have focused on market access for industrial and agricultural goods. We understand progress has been made, but the EU has tried to provide South Africa with a lesser level of market access in some areas.

The insistence of the EU in differentiating between South Africa and the BLNS on market access is not helpful. …